Clark v. State Farm Mutual Automobile Insurance

433 F.3d 703, 2005 U.S. App. LEXIS 29023, 2005 WL 3560879
CourtCourt of Appeals for the Tenth Circuit
DecidedDecember 30, 2005
Docket04-1022, 04-1023
StatusPublished
Cited by58 cases

This text of 433 F.3d 703 (Clark v. State Farm Mutual Automobile Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. State Farm Mutual Automobile Insurance, 433 F.3d 703, 2005 U.S. App. LEXIS 29023, 2005 WL 3560879 (10th Cir. 2005).

Opinion

HENRY, Circuit Judge.

On July 18, 1996, an automobile insured by State Farm Mutual Automobile Insurance Company (“State Farm”) struck Ricky Eugene Clark, a pedestrian. Mr. Clark filed a class-action suit against State Farm to collect extended personal injury protection (“PIP”) benefits under the Colorado Auto Accident Reparations Act (“CAARA”). See Colo.Rev.Stat. §§ l(Mr-701 to 10-4-726 (2002). 1 He alleged that the driver’s Pedestrian Limitation policy from State Farm did not conform to CAARA and that Brennan v. Farmers Alliance Mutual Insurance Co., 961 P.2d 550 (Colo.Ct.App.1998) entitled him to unlimited benefits and lost income. The district court dismissed all claims.

On appeal, we reversed the district court’s decision and concluded that Brennan required reformation of State Farm’s policy to provide extended PIP benefits for injured pedestrians like Mr. Clark. Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234 (10th Cir.2003) (“Clark I”). We remanded the case to determine an effective date of reformation and the amount of extended PIP benefits to which Mr. Clark was entitled. Id. at 1242-43. The district court concluded that the date of its order — December 19, 2003 — was the appropriate reformation date and that Mr. Clark was entitled to a statutory aggregate cap of $200,000 in benefits. See Clark v. State Farm Mut. Auto. Ins. Co., 292 F.Supp.2d 1252, 1270 (D.Colo.2003) (“Clark II”). In July 2004, the district court denied Mr. Clark’s motion for attorney fees. 2

*706 State Farm and Mr. Clark now appeal the district court’s Clark II order. State Farm challenges the level of PIP benefits to which Mr. Clark should be entitled after reformation of its policy. Mr. Clark appeals (1) the effective date of reformation, (2) the district court’s application of an aggregate cap to the policy, and (3) the district court’s limitation of the policy reformation to pedestrians instead of all eligible insured persons. We exercise jurisdiction under 28 U.S.C. § 1291 because the district court certified its judgment as final. See Fed.R.Civ.P. 54(b). For the reasons stated below, we affirm the district court.

I. BACKGROUND

The district court presented a thorough factual and procedural background, and we only briefly summarize the relevant facts here. See Clark II, 292 F.Supp.2d at 1255-1258. On July 18, 1996, Mr. Clark was a pedestrian at an intersection in Pueblo, Colorado, when a vehicle driven by Monica Madrid struck him. The driver’s grandmother, Hortencia Madrid, owned the vehicle and insured it with State Farm’s basic “PI” level of PIP coverage. According to the “Madrid policy” schedule, PI coverage provides (1) payments for medical expenses up to $50,000; (2) payments for rehabilitation expenses up to $50,000; (3) payments for loss of income up to a weekly rate of $400, for 52 weeks; (4) payments for essential services up to a daily rate of $25, for 364 days; and (5) death compensation up to $1,000. See § 706(l)(b)(I), (l)(c)(D, (D(d)(I); Aplt’s App. vol. II, doc. 20, at 18. “Essential services” include “reasonable expenses incurred ... during the insured’s lifetime for ordinary and needed services the insured would have performed without pay but for bodily injury.” Aplt’s App. vol. II, doc. 20, at 15 (emphasis omitted).

Under the Madrid policy, Mr. Clark received PIP payments for $48,617 in medical expenses, $3,377 in essential services, and $15,730 for 52 weeks of wage-loss benefits. After timely paying wage-loss benefits for one year, State Farm discontinued those payments pursuant to PI coverage limits. Only Mr. Clark’s wage-loss benefits are at issue on appeal. He remains unable to work in any capacity and now seeks wage-loss benefits for an indefinite period of time.

The Madrid policy contains a distended Pedestrian Limitation that limits PIP benefits to the lowest level, PI, for pedestrians:

The most we pay for each insured who sustains bodily injury and the period of time from the date of the accident in which the services must be furnished or the loss of income incurred shall not exceed:
1. the amount and period of time shown in the Schedule applicable to each benefit under coverage symbol PI if the insured is a pedestrian. This does not apply to you, your spouse, or any relative.
2. the amount and period of time shown in the Schedule applicable to each benefit under your coverage symbol for any other insured.

Id. at 17 (emphasis in original).

Hortencia Madrid’s son, Roger, first purchased automobile liability insurance from State Farm in 1985 and chose extended PIP benefits coverage at the P3 level. See id. at 18 (detailing the higher allowance for medical expenses and a higher death compensation under P3 coverage). The next year, he reduced coverage from P3 to PI, basic coverage at the lowest level. Mr. Madrid purchased a second policy in 1991, also at the PI level. In 1994, the Madrids changed the named in *707 sured on their insurance policy to Hortencia Madrid, with Monica Madrid as the primary driver. At that time, State Farm did not offer Hortencia Madrid the option to purchase extended PIP benefits that included extended pedestrian coverage.

A. Colorado Auto Accident Reparation Act

In 1973, the Colorado legislature passed the Colorado Auto Accident Reparations Act. In Clark I, we discussed the relevant statutory framework of CAARA:

The stated statutory purpose of CAARA is to “avoid inadequate compensation to victims of automobile accidents.” § 702. Colorado courts construe CAARA liberally to further its remedial and beneficial purposes. CAARA requires that a policy include a minimum level of PIP benefits. Specifically, [subjection 706(1) requires a carrier to provide, without regard to fault, payments for medical expenses, rehabilitation expenses, and lost wages. Section 706 sets dollar and time limits for each category of expense. Section 707 defines the categories of people who receive coverage under section 706 to include “1) the named insured, 2) resident relatives of the named insured, 3) passengers occupying the insured’s vehicle with the consent of the insured, and 4) pedestrians who are injured by the covered vehicle.” Brennan, 961 P.2d at 553. CAARA also requires every insurer to offer the named insured extended PIP benefits in exchange for higher premiums.

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Cite This Page — Counsel Stack

Bluebook (online)
433 F.3d 703, 2005 U.S. App. LEXIS 29023, 2005 WL 3560879, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-v-state-farm-mutual-automobile-insurance-ca10-2005.